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Viasystems Announces Second Quarter 2012 Results

Stocks in this article: VIAS

“One benefit of the slowing of growth across the globe is that the costs of materials and components have remained stable,” noted Sindelar, “and we have so far experienced very little of the energy rationing that was expected to begin early this summer in China. However, we have begun to experience the anticipated increases in the Chinese labor costs.”

“In a notable turn of events during the second quarter, we gained some momentum in demand for our telecommunications products following several quarters of lackluster order patterns in that end market,” continued Sindelar. “Unfortunately, Viasystems is not immune to the overall global softening of demand for electronic components, as we have seen orders flatten or modestly decline across all of our other end markets, and we are feeling more pricing pressures. Taken together, these trends cause us to temper our expectations for sales growth during the second half of the year. In order to provide our investors with some additional clarity on what to expect in our third quarter, given the DDi transaction, we will deviate from our traditional policies and offer revenue guidance of $325 million to $335 million.”

Financial Results

The company reported net sales of $296.9 million for the three months ended June 30, 2012. Year-over-year and sequential increases of 9.6% and 13.3%, respectively, were primarily the result of the company’s acquisition of DDi on May 31, 2012.

Cost of goods sold (excluding items shown separately in the income statement) as a percent of net sales improved to 79.3% for the quarter ended June 30, 2012, compared to 81.1% in the corresponding quarter a year ago, and compared to 80.5% in the immediately preceding quarter ended March 31, 2012. As required by U.S. general accepted accounting principles, inventories purchased in connection with the acquisition of DDi were recorded at market value rather than at manufactured cost, a difference of approximately $3.9 million. Had the manufactured cost value been assigned to the acquired inventories, cost of goods sold as a percentage of net sales in the quarter ended June 30, 2012 would have improved to 78.0%.

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